Australia | Jun 06 2007
By Greg Peel
It’s been busy times for digital media microcap destra corporation (DES). Last week destra announced the sale of its communications business to IP services provider IntraPower for $6.25m, subject to IntraPower listing on the ASX. Under the arrangement, destra will continue to provide digital music services to Intrapower, allowing it to sell musical content to its customers.
The divestment of its communications business is another step in destra’s business plan to become focused specifically on digital media. The company’s objective is to generate and acquire content, build virtual communities around that content, and then sell both the content and accompanying advertising space many times over. FNArena profiled the company recently in “New Media Is Here, And It’s Called destra”; Australia; 04/04/07).
In April, destra entered into a scheme of arrangement to buy Magna Pacific Holdings (MPH), Australasia’s leading independent film and DVD distributor. The deal came hot on the heals of Prime Television (PRT) taking a 12.86% stake in destra, thus providing for part of the funding. About a year ago, destra had also taken a stake in Quickflix (QFX), Australia’s leading DVD home delivery service.
Last month destra, Magna and Quickflix announced a partnership to create a pilot video on demand (VOD) service which will allow home users to downloads movies over the internet.
VOD is the virtual cinema of the future, and will ultimately lead to the demise of the local DVD rental store. However, in order to download movies at speeds less than it takes to watch the movie, home users would need a fast broadband service – the sort of fast broadband service that Telstra (TLS), the ACCC, the government, the ALP and the G9 is currently arguing over. While the battle rages, destra is quietly setting itself into a position of first strike capacity.
This future scenario is not something that’s lost on media mini-mogul Lachlan Murdoch, who when it comes to digital media is rapidly becoming a microchip off the old block. Lachlan also bought a stake in Quickflix, shortly after destra moved into the register. It wasn’t long before conversations were struck up with co-shareholder and similarly-aged destra founder and CEO, Domenic Carosa.
The end result is that Lachlan has now bought into destra via a direct share swap of Quickflix shares for newly created destra shares. The swap takes destra’s holdings in Quickflix to just below the significant level of 20%. Lachlan Murdoch now has a digital media baby he can call his own – or at least some of his own. It’s not quite MySpace yet, but destra is positioning itself to make a “new media” impact while established Australian media enterprises are still coming to grips with such a transition.
In terms of Murdoch’s involvement in destra, Carosa suggests it will be simply “quite informal”.
“I’m sure that we will catch up for a beer every once in a while and talk shop”, Carosa told Boardroom Radio, “He has an extremely good knowledge of the media sector, and I’m certain that I’ll be seeking his counsel every once in a while”.
And one presumes he could open the odd door as well.
Despite movements in destra’s shareholder base, the market has received the news well today, pushing the share price up as high as $0.385. In late afternoon trade the shares remain 9% higher at $0.355.